Online shoppers tipped to offer festive cheer

Online spending growth in the lead up to Christmas will more than triple this festive season, a business forecast group has predicted.

Figures from business information analysts IBISWorld predict overall Christmas spending will rise by 3.9 per cent this year, with the average Australian spending $1600 to bring the total to $28.5 billion.

IBISWorld general manager Karen Dobie expects most of the growth will come from online sales.

Growth in online retailing would eclipse growth in any other retail segment, Ms Dobie said, with IBISWorld forecasting a surge of 34.4 per cent compared with growth just below 10 per cent between December 2010 and 2011.

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Across the key online categories, liquor retailing is expected to generate 10 per cent growth from 2011, followed by electronics with a jump of 7.7 per cent.

“This year we'll spend almost the same amount online as we will on toys, games and video games – all significant categories in traditional Christmas spending," Ms Dobie said.

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“Electronics, clothing, footwear and travel will be the most popular picks for online sales.”

A Google Australia report this week showed that 2012 is expected to be Australia's biggest online Christmas.

Google reported an overall 20 per cent increase in shopping-related searches year on year as Christmas shoppers took to the web to research gift ideas, place orders, and seek out retail outlets.

As Christmas approaches, leading bricks and mortar retailers have been improving their online sites to ensure the bulk of money spent over the internet finds its way into their tills.

David Jones launched its new online shopping site last week, with more than 90,000 product lines available, and Myer has also been adding functions and products to its online store.

Woolworths and Coles have rolled out mobile phone applications and are also strengthening their website offering.

Ms Dobie said traditional clothing and footwear retailers were expected to be "licking their wounds" this festive season, with growth of just 1.3 per cent on last year, noting that this category would feel the heat from the popularity of online purchasing.

Faster delivery times, and in some cases free delivery, are being used this year by online retailers to win customers from conventional retailers.

“Online sites such as theiconic.com.au, asos.com and styletread.com.au are luring customers with promises of super-fast delivery, free shipping and free returns, making it incredibly tough for bricks-and-mortar stores to compete," Ms Dobie said.

"And since the online medium has the added advantage of targeted marketing via email, social media sites (such as Facebook and Twitter), and SMS to promote daily deals and Christmas offers – it's little wonder fashion and footwear retailers are suffering.”

A number of key domestic retailers have migrated online in the past year, such as Cue and the revamped David Jones site, as they seize the opportunity to drive sales and raise awareness, and it seems the more intense the competition, the lower the prices, she said.